When you’re investing in commercial real estate, there are a thousand decisions to make. One of the most important is deciding who is going to manage the day-to-day operations of your property. Managing it yourself can save you money on property management fees but can quickly turn into a big time-suck.
“There are upsides and downsides to both management approaches, just like any aspect of commercial real estate strategy,” said Megan Evans, Assistant Property Manager at NAI Mid-Michigan. “But only you know which approach fits best with your personality, investment strategy, and lifestyle.”
As you weigh your options, here are three questions to ask yourself when deciding whether or not to hire a property management company.
Do I have the time?
Property managers are responsible for everything from tenant screening to rent collection to day-to-day maintenance and grounds keeping. If commercial real estate investment is your full-time gig, managing it yourself may be a no-brainer.
“For some investors, having hands-on control of your property can be a great way to make sure you stay engaged and knowledgeable in each part of your investment,” Evans said. “You’re really going to be the expert on your property.”
But, Evans continued, if commercial real estate is your side hustle or you have other major responsibilities, the time invested in managing your property could be a hindrance. Issues can pop up when you least expect, and you can be the one stuck trying to hunt down a repairman for a maintenance issue on a weekend or holiday. Being strapped for time can amp up your stress and could prevent you from doing the best job you can at the individual tasks of property management.
How much am I saving?
Property management services will typically cost you 5-10% of your total rental revenue, so depending on your total number of properties and local marketplace conditions, this could eat into your bottom line.
However, according to Evans, it’s about more than just dollars and cents.
“You have to consider what your time is worth,” she said. “No matter what your investment strategy is, it has to work for you and your lifestyle. So, ask yourself, ‘would hiring a property manager open up more of your time and energy for other investment opportunities or financial goals?’”
Do I have the expertise and motivation?
A property owner does not a manager make. In addition to the stress of day-to-day management, property managers are responsible for all of the uncomfortable parts of tenant relationships, including conversations surrounding rent collection, maintenance issues, tenant complaints, and even evictions.
“Handling these types of interactions and conflicts can be very challenging,” Evans said. “Not everyone who gets into commercial real estate has the right temperament to be a landlord, but if you have the right resources it can be lucrative.”
Sometimes, putting a middleman between you and your tenant can help you maintain a good rapport with tenants and avoid stress.
Final answer? It all depends.
There is no one right answer when it comes to who should handle property management.
“Our team has decades of experience in this business and we have pretty much seen it all,” Evans said. “So, we can make sure we’re asking you the right questions and sharing our larger insights with you to help you make the right decision for your business.”
Contact us today to find out how we can help you with your property management needs. We’re NAI Mid-Michigan, your best choice for commercial real estate services.